Why You Should Audit Talent

Business leaders are uncertain whether the U.S. economy will experience a sustainable recovery, but the labor market is more dynamic than it has been in the last four years. Priorities have changed from weathering the storm and getting by with less to investing in the business.

Critical roles are getting the attention they deserve. Business leaders have started to take stock of which roles are critical to their corporate strategy and whether they have the right talent in place. However, the picture is grim.

According to research by CEB in 2013, only 18 percent of CEOs felt confident they had the right people in place to deliver on their corporate strategy. Three percent believed their talent was positioned well geographically or functionally, and less than a fifth knew how well their staff stacked up against the competition.

There are plenty of excuses for why CEOs are in the dark about the quality of their talent. Organizations are not the same as they were before the economic downturn. Research by CEB’s Corporate Leadership Council in 2012 reported 98 percent of companies have gone through significant change in the past four years.

Why You Should AuditWhen strategy changes, which roles are seen as critical for success and the balance of competencies and skills required for job incumbents also should change. Yet, most workforces lag behind the change, with workers likely feeling their mix of experience and skills lag behind new job requirements. Compounding the issue, companies are not spending as they should for employee development.

Expecting new behaviors and skills from employees with a less than ideal level of investment in employee development creates a perfect storm for underachievement. CEB research discovered 60 percent of businesses have achieved their employee performance targets. Further, some 22 percent of the potential value anticipated by organizational change is lost due to poor talent alignment.

Talent audits help business leaders get ahead of the potential misalignment between strategy and capability. By taking a snapshot of talent against requirements for current and future roles, talent managers can begin asking critical questions, such as where to invest in employee development, whether managers need to be rotated to new roles or whether to pursue external talent.

A successful talent audit starts by identifying what “good” looks like for critical roles. It is important to differentiate what is needed now and in the future, as one intended outcome of the process is to evaluate an organization’s readiness or ability to achieve its business strategy.

The criteria used in a talent audit should take a whole-person approach. Looking at employees’ capabilities to deliver on role requirements — whether they have the knowledge, skills and ability needed for the role — without questioning whether they have the motivation to take on new responsibilities misses the point. The purpose of a talent audit is to gain as clear a picture as possible about whether employees are likely to drive the business strategy forward.

To conduct a talent audit, a mix of assessments is combined and administered to job incumbents. Depending on how much information is desired, the assessments could include cognitive ability tests, personality and motivation questionnaires, business simulations, interviews, 360-degree feedback or a review of performance ratings. Gather enough useful data to accurately evaluate each participant.

From this mix of data, talent leaders can build a picture of each participant’s current performance and future potential. And by receiving clear competency definitions, participants gain insight into their strengths and development needs while the organization can roll up the data into a picture of how well it is tracking against strategic objectives.

For example, if a company wished to revolutionize the way it delivers customer service, poor performance on competencies related to delivering results and communication could indicate it will fall short.

Where possible, external benchmarks should be used to determine how well-positioned the organization is for its particular industry. Whether the company has its fair share of available talent can help inform if there is any benefit in targeting external talent when hiring for key positions.

Asking Tough QuestionsTalent audits can be successfully used to support organizational change. For example, consider the reorganization of one of global pharmaceutical and health care company GlaxoSmithKline’s (GSK) market companies. The company was changing its structure to better reflect market demands, and the new organization required new responsibilities and roles. GSK’s ambition was to fill new roles with existing staff, and the process needed to be executed quickly to minimize negative impact on the business and to avoid demotivating staff.

The solution was to create clear job descriptions, to assess the staff against the selected competencies and to use assessment data in the decision-making process. This process created trust among the staff, helped managers to make more objective decisions and helped get incumbents into new roles in four weeks. “We are now utilizing the potential of our human capital in a better way,” said Susanna Grundstrom, project manager at GlaxoSmithKline. “HR has become a more strategic partner to the business.”

Information gained through a talent audit can be powerful. Business leaders can quantify whether they have the right talent in place to execute on their business strategy. However, with such knowledge comes the responsibility to act. Where deficiencies are discovered, leaders should look for ways to develop talent. Targeted development programs, job rotations, mentoring programs, process improvements or changes in reward programs should all be on the table.

Other implications could include targeted workforce planning, where increased throughput of staff into critical roles can ensure the right skills and experience are shared across the company. Alternatively, a mix of internal to external hires could be flexed to buy skills that are hard to develop internally.

Underwriters Laboratories (UL) decided driving for higher performance was the No. 1 priority for the business. Relying heavily on its employees’ experience, the company conducted a talent audit as the first step in its efforts to create an integrated approach to talent management that forged a clear link between business objectives, how staff performance was measured and evaluated, and how development was planned.

The starting point was to create competencies that described the critical behaviors needed to drive results. These formed the basis of recruitment, performance management, training, career development and succession across the organization. “We now have a much stronger link between our business objectives, staff performance and driving outstanding customer focus,” said Josh Goderis, director of global talent management at UL.

A talent audit can be a powerful tool for business leaders to understand an organization’s capability to change and develop. The following five actions can help talent leaders get the most out of a talent audit:

• Take a whole person approach to define the expectations of current and future talent by including both behavioral and technical competencies.

• Create a thorough understanding of talent capacity and potential through an objective assessment process. A well-designed process will provide reliable data on talent across the organization.

• Use the results to build both individual and group-wide development processes that address what is most critical to the organization.

• Compare assessment results to relevant external comparison groups such as industry peers to gain insight on the quality of talent.

• Use the insights from assessment and external benchmarks to refine key people processes such as recruitment and performance management to attract and build talent.

Per Carlsson is vice president, head of talent mobility solutions, and Joe Ungemah is vice president talent solutions for SHL. They can be reached at editor@talentmgt.com.